Italy blocks deal on steel subsidies: Rome refuses compromise on state limits

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The Independent Online
ITALY was last night blocking European agreement on a plan to restructure the steel industry. The country was unable to accept a compromise that would have limited state subsidies payable to Italy's Ilva company and stipulated capacity cuts of 1.2 million tonnes of steel.

As the meeting ran into the night, it seemed likely that the 11 other members of the European Union would overrule Italian objections and agree to cut production by 30 million tonnes Europe-wide.

The EU has promised to help bear the social costs, such as retraining, inherent in the scheme, which on conservative estimates could cost as many as 50,000 jobs.

Demands that Italy close its Ilva plant in Bagnoli four years ago provoked riots in Naples. Current efforts to limit production at its Taranto works are as unpopular.

Britain, France, Luxembourg and Denmark are firmly opposed to any weakening of the Commission's demands and are concerned over state aids to loss-making plants in Spain, Portugal, eastern Germany and Italy. The first three cases have been resolved but the deal struck with the eastern German company Eko Stahl - which allowed state financial backing for the company's sale to an Italian group, Riva, in return for agreed cuts in Riva's production elsewhere - was regarded by these four as overgenerous, and Ilva's proposals for self-regulation as unacceptable.

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